Private and community foundations posted average investment returns of 14.1% and 14.7%, respectively, in 2025, both of which easily topped the previous year’s returns, according to a report from the Council on Foundations. It was the third straight year foundations registered double-digit gains, following their worst recorded performance in 2022.
Despite the similar results, their asset allocations diverged noticeably between 2024 and 2025. Private foundations’ allocations to alternative strategies increased to 45.8% in 2025 from 45% in 2024, while community foundations’ allocations to alts fell sharply to 20.5% from 25%. Fixed-income assets for community foundations rose to 17.4% from 16%, while private foundations’ fixed-income holdings dropped to 10.3% from 13%.
The only similarity between the asset allocation changes among the foundations was that they both raised their foreign equities allocations and their cash positions. Non-U.S. equities assets for private foundations grew to 16.3% from 14%, while the average allocation for community foundations rose to 20% from 18%. Cash holdings for private foundations were 2.7%, up from 2.0% in 2024, while those for community foundations increased to 3.2% from 3%.
Private foundations continued to have a significantly larger allocation to alternative strategies, while community foundations had a higher allocation to U.S. equities. Within alternative strategies, the largest allocation for private foundations were to venture capital, marketable alternatives and private equity. For community foundations, the largest allocations were to private equity, marketable alternatives and private real estate.
As a result of a dismal 2022 and aided by the strong 2025 performance, three-year annualized returns soared for both categories of foundations. Private foundations’ average annualized return for the period jumped to 12.4% from 3.1%, while that of community foundations surged to 13.2% from 2.8%. Longer-term numbers were less dramatic, as private foundations reported a five-year return of 8.0%, up from 7.8%, and community foundations reported an 8.5% return over the same period, up from 7.4% in 2024.
Annualized 10-year returns were 9% for private foundations and 8.6% for community foundations. The 15- and 20-year net annualized returns for private foundations were 8.1% and 7.2%, respectively, as of the end of 2025, while community foundations reported investment gains of 7.9% and 7.1%, respectively, over the same periods.
The report found that foundations’ adoption of environmental, social, and governance criteria rose to 28% from 26% for private foundations and to 26% from 25% for community foundations. It also stated that impact investing rose to 29% among private foundations from 26% and to 26% for community foundations from 25%. Diverse manager consideration rose to 20% from 18% among private foundations but declined to 21% from 22% among community foundations.
Outsourced investment offices remained the most commonly used structure for portfolio management, employed by 47% of community foundations and 39% of private foundations in 2025. On average, private foundations outsourced investment management for 93.4% of their portfolios, which was unchanged from the previous year, while community foundations outsourced 89.7%, down from 91% in 2024.
The study covered 285 foundations, consisting of 171 private foundations and 114 community foundations with $126.9 billion in combined assets.
Tags: Asset Allocation, Endowments, Foundations, investment performance, Private Markets, Public Markets